Land Transfer Tax and First Time Homebuyer Refunds

When you buy land or an interest in land in Ontario, you pay land transfer tax. First time home buyers of an eligible home may be eligible for a refund of all or part of the tax. For more information on land transfer tax, visit the following website: http://www.fin.gov.on.ca/en/tax/ltt/index.html.

Land transfer tax rates

The tax rates calculated on the value of the consideration are:

As of January 1, 2017, the tax rates for land transfer tax depend on the date of the agreement of purchase and sale.

If an agreement of purchase and sale is entered into after November 14, 2016, and registration or the disposition occurs on or after January 1, 2017, the tax rates on the value of the consideration are as follows:

0.5% on amounts up to and including $55,000.

1.0% on amounts exceeding $55,000, up to and including $250,000.

1.5% on amounts exceeding $250,000, up to and including $400,000.

2.0% on amounts exceeding $400,000.

2.5% on amounts exceeding $2,000,000, where the land contains one or two single family residences.

The Province proposed to restrict eligibility of the first time home buyers refund program to Canadian citizens and permanent residents, which also came into effect as of January 1, 2017.

First Time Homebuyer Refunds

How much money could I receive?

http://www.fin.gov.on.ca/en/refund/newhome/
The amount of refund you could receive varies depending on the cost of your home. To help Ontarians buy their first home, the Province has doubled the maximum refund for first time home buyers from $2,000 to $4,000, effective January 1, 2017. With the increased maximum, no land transfer tax would be payable by qualifying purchasers on the first $368,000 of the value of consideration for eligible homes.

For Example:

Cost of Home

Tax Payable

Tax Refund

Net Tax Payable

$200,000

$1,725

$1,725

$0

$300,000

$2,975

$2,975

$0

$400,000

$4,475

$4,000

$475

If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Finance, within 18 months after the transfer. No interest is paid on this refund.

Do I qualify?

To get a refund of land transfer tax, you:

• Must be at least 18 years old
• Must occupy the home as your principal residence within nine months of the date of transfer
• You cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world.
• If you have a spouse, your spouse cannot have owned an eligible home, or an interest in an eligible home, anywhere in the world while being your spouse.
• You must apply for a refund within 18 months after the date of the transfer.

The Province is proposing to restrict eligibility of the first-time homebuyers refund program to Canadian citizens and permanent residents, effective January 1, 2017.

Tax rates and brackets have not changed since 1989, however, the Province is proposing to modernize the rates to reflect the current real estate market:

·The tax rate on the portion of the value of consideration above $2,000,000 for purchases of one or two single-family residences would increase from 2% to 2.5%.

·The tax rate on the portion of the value of consideration above $400,000 for purchasers of all other types of property would increase from 1.5% to 2%. All other types of property, for example, include commercial, industrial, multi-residential and agricultural properties.